Enclosed is the response to
your request for an opinion letter signed by the then Acting Wage and Hour Administrator
Alexander J. Passantino on January 16, 2009 and designated as Wage and Hour
Opinion Letter FLSA2009-29. It does not appear that this response was placed
in the mail for delivery to you after it was signed. In any event, we have
decided to withdraw it for further consideration by the Wage and Hour
Division. We will provide a further response in the near future.

The enclosed opinion letter,
and this withdrawal, are issued as official rulings of the Wage and Hour
Division for purposes of the Portal-to-Portal Act, 29 U.S.C. § 259. See29
C.F.R. §§ 790.17(d), 790.19;
Hultgren v. County of Lancaster, Nebraska, 913 F.2d 498, 507 (8th Cir.
1990). Wage and Hour Opinion Letter FLSA2009-29 is withdrawn and may not be
relied upon as a statement of agency policy.

Sincerely,

John L. McKeon
Deputy Administrator for Enforcement

FLSA2009-29

This Opinion Letter is withdrawn.

January 16, 2009

Dear Name*:

This is in response to your request for an opinion regarding
whether a project supervisor in the residential homebuilding industry qualifies
for an exemption under section 13(a)(1) of the Fair Labor Standards Act (FLSA).* You ask specifically whether
the project supervisor qualifies as an employee employed in a bona fide
administrative capacity. It is our opinion that the position is exempt from
the minimum wage and overtime requirements of the FLSA.

You indicate that project supervisors are employed by
homebuilding companies to supervise and coordinate the construction of
residential homes. Often the homebuilding company will outsource the actual
construction of the home to various subcontractors, and the project supervisor
will serve as the company’s representative at the worksite in dealings with
subcontractors, suppliers, customers, and government inspectors. A project
supervisor spends more than half of his/her time directing, scheduling,
managing, and paying subcontractors and suppliers. Additionally, the project
supervisor reviews and modifies new home plans; interacts with building
inspectors; ensures each home is ready for each required inspection; responds
to customer concerns and complaints; reviews the initial home construction
budget to ensure the estimates are reasonable; inspects the work of subcontractors
and suppliers; tracks the home costs against original estimates as construction
progresses; acts as the company safety inspector at the worksite; works with
subcontractors to ensure compliance with all federal and state safety
procedures and regulations; and takes appropriate and necessary action if an
accident occurs.

Section 13(a)(1) of the FLSA exempts from its minimum wage
and overtime pay provisions “any employee employed in a bona fide executive,
administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). The
exemption is determined not by occupational title or job classification, but
rather by the duties and salary of the individual employee involved. See29 C.F.R.
§ 541.2.

The term “employee employed in a bona fide administrative
capacity” in section 13(a)(1) of the FLSA includes “any employee:”

(1) Compensated on a salary or fee basis at a rate of not
less than $455 per week . . . exclusive of board, lodging, or other
facilities;

(2) Whose primary duty is the performance of office or
non-manual work directly related to the management or general business
operations of the employer or the employer’s customers; and

(3) Whose primary duty includes the exercise of discretion
and independent judgment with respect to matters of significance.

Regarding the first requirement that the project supervisor
is compensated on a salary or fee basis at a rate of not less than $455 per
week, exclusive of board, lodging, or other facilities, you request that we
assume the project supervisor meets this requirement and is paid accordingly.
Therefore, we focus on whether the position also meets the primary duty test in
determining whether the project supervisor qualifies for the administrative
exemption. To satisfy the primary duty test, the project supervisor’s primary
duty must include both the performance of office or non-manual work directly
related to the management or general business operations of the employer and
the exercise of discretion and independent judgment with respect to matters of
significance.

To qualify for the administrative
exemption, an employee’s primary duty must be the performance of [office or
non-manual] work directly related to the management or general business
operations of the employer or the employer’s customers . . . To meet this
requirement, an employee must perform work directly related to assisting with
the running or servicing of the business, as distinguished, for example, from
working on a manufacturing production line or selling a product in a retail or
service establishment.

Additionally, as stated in 29 C.F.R. § 541.201(b):

Work directly related to management or
general business operations includes, but is not limited to, work in functional
areas such as tax; finance; accounting; budgeting; auditing; insurance; quality
control; purchasing; procurement; advertising; marketing; research; safety and
health; personnel management; human resources; employee benefits; labor
relations; public relations; government relations; computer network; internet
and database administration; legal and regulatory compliance; and similar
activities.

We recently issued an opinion, Wage and Hour Opinion Letter
January 16, 2009, in which we concluded that project superintendents employed
by a commercial construction company qualify as exempt administrative employees
because their primary duties appeared “to relate directly to the management or
general business operation of [the employer], i.e., they are responsible for
overseeing a commercial construction project from start to finish.” (citing 29
C.F.R. § 541.201(a)-(c)). As we explained in Wage and Hour Opinion Letter
January 16, 2009, recent decisions in the federal courts demonstrate that the
application of these requirements is highly fact specific. See Gottlieb v.
Construction Servs. & Consultants, Inc., No. 05-14139, 2006 WL 5503644,
at *6-7 (S.D. Fla. July 24, 2006) (project superintendents whose primary duty
“involved producing the product their company existed to market” rather than
servicing the company itself, and where “all ‘matters of significance’ were
determined by [the project supervisor’s] superiors” were not exempt
administrators).

In Gottlieb, the project superintendent did not
qualify for the administrative exemption because, in part, his duties were
primarily to inspect the work of subcontractors to ensure compliance with the
builder’s plans to schedule the subcontractors and supplies to ensure they were
both in place at the proper time. See 2006 WL 5503644, at *6; 29
C.F.R. § 541.203(g) (“[o]rdinary inspection work generally does not
meet the duties requirements for the administrative exemption”); 29
C.F.R. § 541.202(e) (“the exercise of discretion and independent judgment
must be more than the use of skill in applying well-established techniques,
procedures, or specific standards described in manuals or other sources”). The
fact that the project superintendent’s work was important to the company,
affecting its profitability and reputation, was not dispositive. See
Gottlieb, 2006 WL 5503644, at *6 (citing Sack v. Miami Helicopter Svc.,
Inc., 986 F. Supp. 1456, 1469 (S.D. Fla. 1997)); 29 C.F.R. § 541.202(f).

From your letter describing the project supervisor’s duties,
it appears that an overwhelming majority of his/her work is non-manual work
directly related to the management or general business operations of the
employer, a homebuilding company, and includes tasks such as budgeting,
auditing, quality control, purchasing, procurement, safety and health,
personnel management, human resources, labor relations, public relations, government
relations, legal and regulatory compliance, and similar activities.

To begin, the actual manual work of constructing the home is
outsourced to subcontractors and suppliers. As previously stated, the project
supervisor supervises and coordinates the construction of the home and serves
as the homebuilding company’s representative at the work-site in dealings with
subcontractors, suppliers, customers, and government inspectors.

In your letter, you indicate that the project supervisor
spends more than half of his/her time directing, managing, scheduling, and
paying subcontractors and suppliers. In discharging these duties, the project
supervisor evaluates the quality and efficiency of the subcontractors’ and
suppliers’ work, is authorized to stop their work to correct any observed
deficiencies, and may require them to remove any of their employees from the
worksite. If necessary, the project supervisor may recommend the dismissal of
subcontractors and suppliers whose work is not satisfactory. When a particular
subcontractor’s contract is up for renewal, the project supervisor provides
significant input as to who will be re-contracted for future services.

Additionally, the project supervisor reviews and modifies
new home plans, making sure there are no conflicts between the plans and the
actual construction of the home. The project supervisor ensures that each home
meets all safety, quality, and legal requirements; ensures each home is ready
for inspection; and negotiates the best solution for any issue that may arise
with a building inspector, subcontractor, or supplier. Also, the project
supervisor schedules the subcontractors and suppliers and commits the
homebuilding company to pay when appropriate.

Furthermore, the project supervisor serves as each
homebuyer’s primary contact in dealing with the construction of the home and
also meeting with prospective customers to explain the construction process.
The project supervisor reviews the initial home construction budget to ensure
the estimates are reasonable and tracks the construction costs against the
original estimates once construction begins. Finally, the project supervisor
is not typically subject to any on-site supervisors by any other company
employee. It appears that, like the project superintendents in Wage and Hour
Opinion Letter January 16, 2009, the project supervisors oversee the commercial
construction project from start to finish, using a similar amount of discretion
and independent judgment when carrying out their duties. The exercise of
discretion and independent judgment implies that the project supervisors make
independent choices concerning matters of significance, such as whether to
depart from prescribed standards or permitted tolerances. See 29 C.F.R.
§ 541.202(a)-(c). Unlike in Gottlieb, the primary duties of the project
supervisors seem to be more involved than just inspecting work to ensure
compliance with the builders’ plans and scheduling subcontractors and supplies.
Therefore, it appears the project supervisor’s primary duties meet the
requirement of being office or non-manual work directly related to the
management or general business operations of the employer as stated in 29
C.F.R. § 541.200(a)(2) and further described in 29 C.F.R § 541.201.

As stated in 29 C.F.R. §541.202(a):

To qualify for the administrative
exemption, an employee’s primary duty must include the exercise of discretion
and independent judgment with respect to matters of significance. In general
the exercise of discretion and independent judgment involves the comparison and
the evaluation of possible courses of conduct, and acting or making a decision
after the various possibilities have been considered. The term “matters of
significance” refers to the level of importance or consequence of the work
performed.

Additionally, as stated in 29 C.F.R. § 541.202(b):

Factors to consider when determining
whether an employee exercises discretion and independent judgment with respect
to matters of significance include, but are not limited to: whether the
employee has authority to formulate, affect,
interpret, or implement management policies or operating practices; whether the
employee carries out major assignments in conducting the operations of the
business; whether the employee performs work that affects business operations
to a substantial degree, even if the employee’s assignments are related to
operation of a particular segment of the business; whether the employee has
authority to commit the employer in matters that have significant financial impact;
whether the employee has authority to waive or deviate from established
policies and procedures without prior approval; whether the employee has
authority to negotiate and bind the company on significant matters; whether the
employee provides consultation or expert advice to management; whether the
employee is involved in planning long- or short-term business objectives;
whether the employee investigates and resolves matters of significance on
behalf of management; and whether the employee represents the company in
handling complaints, arbitrating disputes or resolving grievances.

“The exercise of discretion and independent judgment implies
that the employee has authority to make an independent choice, free from
immediate direction or supervision. However, employees can exercise discretion
and independent judgment even if their decisions or recommendations are
reviewed at a higher level.” 29 C.F.R. § 541.202(c).

It appears the project supervisor’s primary duties involve
the exercise of discretion and independent judgment with respect to matters of
significance. For example, in your letter, you indicate that the project
supervisor has significant authority to adjust the construction process as
necessary when, in his/her opinion, such a change is needed to meet any safety,
quality, or legal requirements, or to ensure a high quality home is provided
within the estimated budget, and to commit the homebuilding company to any
payments that are required to complete such an alteration; to negotiate solutions
to issues raised by the building inspector, subcontractors, or suppliers; to
schedule subcontractors or suppliers; to stop their work when it is
unsatisfactory; to order the removal of their employees when necessary; to
recommend the dismissal of a subcontractor or supplier if appropriate; to
commit the homebuilding company to any payments to subcontractors or suppliers
for any work or building materials provided; and to stop payment to any
subcontractor or supplier when appropriate. Additionally, as previously stated
the project supervisor serves as the homebuilding company’s sole representative
at the worksite and must deal with any issues, concerns, unforeseen events, or
problems that may arise during the entire homebuilding process. Thus, the project
supervisor has the authority to formulate, affect, interpret, and implement
management policies and operating practices; carry out major assignments in
conducting the operations of the homebuilding company; perform work that
affects business operations to a substantial degree; commit the employer in
matters that have significant financial impact; waive or deviate from
established policies and procedures without prior approval; negotiate and bind
the company on significant matters; and investigate and resolve matters of
significance on behalf of the company. Therefore, it appears the project
supervisor’s primary duties meet the requirement of including the exercise of
discretion and independent judgment with respect to matters of significance as
stated in 29 C.F.R. § 541.200(a)(3) and further described in 29 C.F.R §
541.202.

It is our opinion that the project supervisor position is
exempt from the FLSA’s minimum wage and overtime requirements as an employee
employed in a bona fide administrative capacity, provided that the salary basis
requirement is met.

This opinion is based exclusively on the facts and
circumstances described in your request and is given based on your
representation, express or implied, that you have provided a full and fair
description of all the facts and circumstances that would be pertinent to our
consideration of the question presented. Existence of any other factual
or historical background not contained in your letter might require a
conclusion different from the one expressed herein. You have represented
that this opinion is not sought by a party to pending private litigation
concerning the issue addressed herein. You have also represented that
this opinion is not sought in connection with an investigation or litigation between
a client or firm and the Wage and Hour Division or the Department of Labor.